Tax Breaks You Should Know About If You Own A Home

The task of owning a home isn't a simple one. Still, plenty of people have dreams of leaving the rental game behind and moving into a property they own instead. There are plenty of good reasons to buy your home, among them is the reality that equity building can translate into all sorts of other financial perks. There are also a great many potential pitfalls along the way when buying your first home and then managing it over the long term.

Property taxes levied against homeowners can rise up into the thousands on homes that don't even purport to be luxury commodities. Then there's the cost of upkeep that can't be ignored. As a renter, if your dishwasher breaks or you find a mouse running around the garage, there's no need to start panicking about how you'll solve the issue. You just need to pick up the phone and call your landlord. As a homeowner, the task and its related expenses all fall to you. Without a clear budgetary plan, you may even find yourself becoming house poor in the process of furnishing the property and paying all the bills. But there's a silver lining to many of the expenses that come with homeownership. Growing your net worth alongside the rising value of the home isn't the sole benefit, and every year when you prepare to file your taxes you can actually take advantage of your home to claim a variety of potentially game changing tax breaks that can help keep more of your money in your pocket. These are three of the key areas to look out for as you prepare your taxes this year.

The federal government considers the interest you pay on your mortgage loan to be a property expense. As a result, interest paid to the bank counts as an action item that you can deduct from your tax burden. This is great news for homeowners across the country, especially newer owners who have bought their property recently.

In early March of 2025, the average interest rate on a 30-year fixed mortgage was 6.68% while the average total mortgage debt on standard loans was $252,505 in 2024. Median payments figures for January 2025 stood at $2,205 per month, making this both a costly budgetary expense, and one that can potentially offer a radical realignment in your tax filing strategy. By claiming this component of your deductible expenses rather than opting for the standard deduction, you may be able to drastically decrease your adjusted gross income. The result is a direct reduction in the amount of money you owe to the IRS every year, skyrocketing your refund amount in the process. However, it's worth noting that this refund isn't some kind of bonus or gift but rather your money from the start. Using it wisely can increase the financial benefit you see tremendously. Leveraging a significant tax refund to boost your retirement savings or cut down on credit card debts or other obligations can act as a twofold financial windfall.

People who work from home are already using their living space for more than one purpose. Homeowners who have set up a dedicated office space in their property have the ability to leverage the house in yet another advantageous way. It has become abundantly clear that working from home has the ability to improve a range of lifestyle aspects. Not only are you saving money and time by not commuting to and from the office, but you also get to work in comfort and increased privacy. Of course, there are also drawbacks and the camaraderie that coworkers often establish can become lost. Regardless, adding its value as a tax deduction notches another win for the working from home camp.

To take advantage of home office deduction opportunities, you'll need to follow a strict set of rules laying out by the IRS. You can't include portions of your home that see mixed use, for instance. This means that a room completely closed off to other home uses that is solely an office space qualifies as a tax write off. On the other hand, if you are working in half of a room that also includes bar equipment or a homework area for your children, this likely doesn't rise to the requisite standard. If you take the time to understand these regulations and set your office space up to comply with IRS guidelines, deducting all manner of expenses like utility charges and material costs can really add up to a major tax write off.

If you moved before 2018, there's a chance that you may have missed out on claiming a moving expense tax deduction and there might still be an opportunity for you to file an amended return to change your tax burden and potentially increase the money owed to you by the federal government. After 2018, changes to the tax code closed this deduction avenue off to most taxpayers, but unclaimed moving expenses from a time prior to that alteration may still yield fruit. If you did engage in a relocation, it may be worth your while to calculate the moving expenses you still have documentation to support. The total may just be enough to move the needle substantially on your tax burden and bring back a tidy return. Active duty military members also this option with unreimbursed moving expenses as a result of a permanent change of station – this isn't closed off by the 2017 Tax Cuts and Jobs Act, so more recent relocations can bring back an important tax break.

However, a more recent move isn't exempted entirely from important tax benefits. If you are selling your home and lived in it for at least two of the prior five years then you can lop off a major portion of your tax liability on the capital gains earned from the sale. If you are single, the first $250,000 of profit are exempted through the capital gains tax exclusion. For married, joint filers that figure is $500,000.